Watering our Pocketbooks: Should Canada Move to Privatisation of Water?

Originally in Report on Positivity: Canada has had some convulsions over the issue of water before and since the Walkerton, Ontario E. coli infections of 2000. There is heated debate over methods of efficient delivery and ensuring the availability of clean water. Should rights to distribution and purification be in public or private hands?Canada has had a history of firm public control over its waterworks. This is not unique to the region. Almost 95% of water around the globe is provided by public utilities. So what’s all the noise over private waterworks about then?

Generally, water has always been a public good, a public interest, a matter of public domain. The private creep is new, revolutionary, and a challenge on water as a priceless right in an attempt to turn it into a sellable good; a commodity.

Private expansion into waterworks has intensified and peaked in our time because of a very real and fast approaching crisis. Stable access to abundant safe water is diminishing at an alarming rate. Already, as much as 60% of all illness on the globe is water related.

In order to meet this crisis, it is estimated that C$90 billion in water-related infrastructure investments are needed over the next 20 years. This is enough to sink any city council’s heart. The problem is especially acute for the cash-starved Canadian cities.

Canada’s top 10 cities are a source of half the country’s wealth yet they receive only a 7% share of the taxes. Not only must municipalities pay for general investments and maintenance, but now they also have to shoulder urgently needed investments in waterworks.

This is where the private sector steps in.

As the Canadian Council for Public-Private Partnerships points out, the slack in funding can be compensated for by private firms. So, there seems no need to look into a fair distribution of funds raised by taxes or a means of reforming water consumption and utilities: the private sector will run the whole thing for us. Certainly, the expectation is that, with their deep pockets, they should be able to afford all major essential investments.

The further promise to the public: greater efficiency, low costs, safe water.

Hamilton was the first of Canada’s cities to privatise a large water utility. They got nothing they hoped for. Shortly after privatisation, throughout the mid to late 1990s, the city had to live through some of the most frequent and worst sewage spills in its history. In the most dramatic instance, 182 million litres of human waste, untreated metals and chemicals spilled into the harbour and Lake Ontario. Some of this made its way into the basements of people’s homes and businesses. This does not show well on the promises of efficiency or safe water treatment.

As for low costs, that didn’t pan out either. Philip Utilities Management Corporation, the corporation which ran the affair, was quick to renegotiate its contract with the city, repeatedly hiking prices up after citing unexpected costs. So, the citizens of Hamilton and surroundings had to pay even more for poor service.

Perhaps this shouldn’t have come as a surprise. According to Stuart Smith, the brainchild of Hamilton’s water privatisation, “The main notion wasn’t to save Hamilton money on their water — that was a good effect too. But the main idea was so we could then go and get contracts all over the world.”

Privatised waterworks is an infant industry in Canada and, arguably, things could change after maturation. Lucky for us, there is a long-term case study in France.

France is the birthplace of modern water privatisation. They have had strong private involvement in waterworks since the Napoleonic era. The industry is well established there and two of the biggest international water corporations, Suez and Vivendi Environment, hail from the land of wine and cheese.

In France, privately run utilities are 10%-15% more expensive than public ones. Furthermore, there is no evidence anywhere that the private industry has a better run at meeting its investment requirements, nor is there proof of higher efficiency.

When the private water industry in Brittany, France, was faced with accusations of excessively high nitrate contents in the local drinking water, it refused to do anything about it. The industry claimed the removal of nitrates to be too costly and blamed farmers’ firtilizers for the problem. The source of the problem aside, a water utility must ensure it provides citizens with safe drinking water no matter the profits or lack thereof in the task.

According to the Public Services International Research Unit, this “behaviour pattern is not restricted to occasional ‘bad’ companies, or ‘bad’ managers, it is typical of the forces at work in privatized water operations.” They came to this conclusion after completing a report for the Walkerton, Ontario inquiry.

The private industry has a different goal than citizens. Private operators, ultimately responsible to their shareholders, seek to maximise their profits. This creates an incentive to maximise prices, and minimise costs. The idea of cutting costs carries right into the promised water investments that are at the root of support for public private partnerships. So, the profit-driven private industry has every reason to commit to investments in order to be awarded contracts, yet it is not in its best interest to carry out every publicly good investment idea.

Not so long ago, Gerard Payen, the senior executive vice-president of Suez, admitted that, at least in the past, they and other corporations may have taken advantage of situations that were not necessarily in the best interest of people. “If a government came to us and said, ‘we want to sell off our assets’, then who are we to say ‘no’? We are in business after all.”

For this they cannot be blamed. It is the nature of business to seek profit. The smart thing, then, is to give control of our waters to an entity that is directly responsible to the local people rather than to shareholders. The smart thing would be to support public institutions in meeting our water needs.